The criticism comes as Treasury Economic Secretary Kitty Ussher assured worried NDFA investors at the Labour Party conference in Manchester that the Government will investigate the matter.

Nexus Independent Financial Advisers director Kerry Nelson, one of the first voices to warn of the dangers of structured products before the precipice bond debacle, says the regulator must take responsibility for failing to learn from past mistakes.

She says: “We see this time and time again, you can highlight something and say this could be an issue, let’s do something about it and then it is all buried again until next time it rears its ugly head. It is not a way to regulate an industry.”

Nelson says an industry-wide voluntary code would help communicate investment risk to advisers and clients.

SimplyBiz chairman Ken Davy says: “We have to wonder what the FSA has been doing in allowing this lack of transparency to continue, especially considering what has happened in the past. The FSA have either been asleep on the job or the providers distributing these products have pulled the wool over their eyes.”

Speaking at a fringe event at the Labour conference this week, Ussher was pressed on the issue of Lehman-backed structured products by a worried investor.

Ussher told Paul Wheeler, 52, who took out a £50,000 NDFA capital secure fixed growth plan, she would look into the matter and asked for information about how many people could be affec- ted and how the products were marketed.

Advisers have expressed concern that losses will not be covered by the Financial Services Compensation Scheme as the product provider has not gone bust.

Last week, addressing an FSA conference, IMA chairman Robert Jenkins warned that structured products were “largely free from regulatory oversight” and asked “is someone asleep on the watch?”

Structured products from NDFA, DRL, Meteor and Arc are among those affected by Lehman’s collapse. An FSA spokeswoman says the FSA does not regulate structured products but, as a matter of course, regularly monitors structured products offered to retail investors by advisers.

Since the credit crisis started last summer, however, the landscape has dramatically shifted and deteriorating economic conditions have sapped investors’ risk appetites.July brought a reversal of fortunes, with energy and materials falling significantly while the financial sector, the source of the meltdown, rebounded from its lows as investors started to take advantage of attractive valuations.Such […]

“Nothing tastes as good as skinny feels,” said supermodel Kate Moss, who is not often credited for her insights into policy making. Perhaps she should be. In politics, as in matters of diet, the course of action that is the best over the long term is often not the most desirable course of action in the short term. Add the instant gratification of the democratic electoral cycle and, instead of good policy making, you sometimes get the equivalent to a midnight binge in front of the fridge.

The value of an investment and any income from it can fall as well as rise and you may not get back the amount originally invested. Forecasts and past performance are not a guide to future performance. Some information and statistical data herein has been obtained from sources we believe to be reliable but in no way are warranted by us as to their accuracy or completeness. These are Neptune’s views and as such this document is deemed to be impartial research. We do not undertake to advise you of any change to our views.

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